• Fidelity removes staking from Ethereum ETF plan to comply with SEC.
• SEC delays approval decision on Fidelity’s Ethereum ETF application.
• Analysts turn bullish on Ethereum ETF approval, expect significant inflows.

Fidelity Investments has amended its S-1 registration statement with the United States Securities and Exchange Commission (SEC) for its prospective Ethereum ETF. The revision, notably omitting any mention of staking—a key feature highlighted in its initial filing—comes as the regulatory body tightens its oversight on cryptocurrency staking services.

Originally filed in November, the initial prospectus for the Fidelity Ethereum Fund outlined a strategy to engage in staking ether through a staking provider, aiming to generate staking rewards. However, the recent amendment aligns with an SEC directive, following its action against Coinbase in June 2023 for offering staking services, which the SEC claimed violated securities laws. The move suggests a cautious approach by Fidelity amidst increasing regulatory scrutiny.

The adjustment to Fidelity’s filing is part of a broader requirement from the SEC that all prospective Ethereum ETF issuers submit amended 19b-4 forms by this morning. If approved, these amendments will allow the ETFs to begin trading, setting a new precedent in the crypto financial products space.

Amidst these regulatory developments, optimism about the approval of Ethereum-based ETFs remains high. Geoff Kendrick, Head of FX Research and Digital Assets Research at Standard Chartered, expressed a strong conviction, estimating an 80% to 90% probability of approval within the week. Kendrick anticipates that the approval of spot ether ETFs could attract significant capital inflows, potentially amounting to between $15 billion and $45 billion in the first year.

The SEC has extended its review period for Fidelity’s application for a spot Ethereum ETF, pushing back the decision to a new deadline. Originally anticipated earlier, the SEC’s postponement aligns with similar delays affecting other financial institutions’ ETF proposals due to ongoing regulatory uncertainties. Market analysts now point to May 23 as a critical date, which is also the final decision deadline for VanEck’s Ethereum ETF application. 

Recent market analysis has injected a fresh wave of optimism into the cryptocurrency sector. Bloomberg’s latest assessment significantly raised the probability of an Ethereum ETF approval to 75%, a sharp increase from the previous estimate of 25%. This reassessment has resonated powerfully within the investment community, contributing to a robust rally in Ethereum.

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